1. The FOMC has historically had two main guidelines to follow, in addition to maintaining overall economic stability. One has remained virtually unchanged while the other has been “loosened” substantially. Which of these has loosened beginning under Bernanke and then under Yellen?
A) GDP Growth
B) Relative Strength of the Dollar
C) Unemployment Rate
D) Inflation
2. Through decreasing the reserve requirement for banks, money supply is increased through which of the following:
A) Loans are immediately 100% funded and utilized, leaving none to be tied up as deposits
B) Treasuries are purchased, thus increasing the money supply
C) Loans are partially held as deposits, creating a multiplier effect and increasing money supply
D) Lowering reserve requirements does not increase the money supply